| Development Is Not Possible in the WTO |
For Development to Live, the Doha Round Must Die!
Written by Food Sovereignty Network
Tuesday, 25 July 2006
A. Introduction
The collapse of negotiations in the World Trade Organisation’s (WTO)
Doha Round is good news for people around the world. Despite
efforts by some delegations to “save” the Doha Round, talks during
the mini-ministerial meeting that was scheduled from June 29-July 2
also did not bear fruit. Developing countries have held their
ground and not caved in to the demands of developed countries to
provide greater market access in agriculture, fishing, industry and
services unless the developed countries first fulfill their own
long-standing and neglected commitments to reduce trade distorting
subsidies and promote a more balanced and equitable negotiating
environment within the WTO.
This document attempts to summarise the different government positions in the WTO negotiations since the Hong Kong Ministerial Conference. It relies on and borrows greatly from analyses already conducted by policy research organizations, social movements and civil society coalitions monitoring the WTO (please see the References section for details). The document is intended as an informational resource for social movements, civil society organizations, elected representatives, and concerned groups and individuals on the state of the Doha Round negotiations at this time. It outlines some important developments overall and provides a summary of key issues in the agriculture, NAMA and services negotiations.
The focus of negotiations in the recent collapsed mini-ministerial
meeting was a ‘triangle’ of issues consisting of: market access in
agriculture; domestic supports in agriculture, and; market access in
Non-Agricultural Market Access (NAMA). In particular, the pressure
was on the European Union (EU) to improve its offer on agricultural
market access, for the United States (U.S.) to improve its offer to
reduce domestic supports and lower its ambition on agriculture and
NAMA market access, and for the larger developing countries to agree
to higher cuts to industrial tariffs. While the EU and NAMA 111
indicated a willingness to move on their positions, the U.S. was
completely unwilling to revise its market access demands or agree to
further cuts in domestic support.
However, the battle is not over yet. Agriculture, industry and
services, which form the backbones of the economies of all
countries, can still be traded off against each other with scant
regard for the livelihoods and well-being of hundreds of millions of
people who will not receive any benefit from the trade offers
currently on the table. Equally serious is the potential erosion of
the sovereign rights of governments to protect broad based public
interest in their countries as a result of WTO commitments.
Negotiations are being led by the Group of 6 (G 6) made up of the
U.S., EU, India, Brasil, Australia and Japan. As always, the
negotiations are top down and non-transparent, with the likelihood
that majority of the WTO members can still be pushed to accept a
trade package agreed on by a minority. In a renewed bid to “save”
the Doha Round, the G 6 had planned two meetings in Geneva in July:
first on July 23-24, and again on July 28-29 in Geneva. The July 23
meeting did not result in a new trade package. It remains to be
seen whether some agreement will be forged in the coming weeks.
Overall, the following developments and issues have been important
in the current negotiations:
1.
Pascal Lamy has been given the task of “facilitating” consensus
among the WTO members.
This is extremely dangerous because Lamy knows the fears and
insecurities of developing country members, especially the Least
Developed Countries (LDCs) and the Africa group, which have thus far
been strong in defending their positions.
There have been concerns that Lamy would himself come up with a
draft negotiating text based on the “convergences” that he
perceives. Lamy has also
attempted to turn the language of negotiations to stress market
access instead of development. A catch phrase he
used before and during the mini-ministerial is "real trade flows"
which means cutting a country's bound tariffs to below the applied
rate.
There was also lack of clarity about what Pascal Lamy’s mandate
actually entails. There is a real possibility that Lamy will create
convergences based on his discussions with the
G-6. And further that these convergences will only address what he
and the G-6 consider "core modalities" while ignoring other crucial
issues such as Special Products (SPs) and Special Safeguard
Mechanisms (SSMs) in agriculture, flexibilities in NAMA, and how to
deal with preference erosion. Many developing countries are also
worried that the urgency of the time schedule to very rapidly reach
agreement will pressure developing countries to accept a deal they
cannot fully comprehend technically (given the short time span) or
that they do not substantively agree with.
2.
During the G-6 meeting before the June 29 mini-ministerial meeting,
Lamy talked about a “landing zone of 20” in as a possible
negotiating position or goal.
Lamy’s “landing zone” is the place where he is likely to push
so-called “convergence” of negotiating positions. This means: the
U.S. adopts a $20bn ceiling for agriculture subsidies, developing
countries cut industrial tariffs to no more than 20 per cent, and
the WTO membership adopts the G20’s suggestion on agriculture
tariffs. The first two elements of this position are of absolutely
no benefit to developing countries. The second element asks
developing countries to take much greater cuts in industrial tariffs
than they have currently proposed.
With regard to the ceiling on U.S. domestic supports and subsidies in agriculture, we need to first examine the U.S.’s own proposal. The October 2005 U.S. offer to cut domestic supports did not touch on the real supports they provide. The proposed cuts would allow them to provide supports of up to U.S.$ 23 billion, which is already more than the amount of supports the U.S. actually provides. But more important, these cuts do not include the $51 billion that the U.S. provides under the Green Box, which will remain unchallenged even under the current negotiations. Lamy’s suggestion that the U.S. cut its subsidies to U.S.$ 20 billion is meaningless since 70 per cent of U.S. subsidies are housed in the Green Box. It would be quite simple for the U.S. to do some creative accounting to shift about a $1 billion of subsidies from the Blue to the Green Box, thus not making any real cuts in its overall level of domestic supports and subsidies.
In such a scenario, developing countries would only be able to
challenge the U.S. by bringing it to the Dispute Resolution
Mechanism (DSM). But despite having won cases, such as the one on
cotton, developing countries, including Brazil, have not been able
to ensure that the U.S. complies with the findings of the DSM.
Equally worrying is that the U.S. is now asking for the “peace
clause” to be brought back into the Agreement on Agriculture (AoA).
The “peace clause” was a provision agreed to in the Uruguay Round
which provided a 9-year grace period during which domestic support
policies and export subsidy arrangements were exempt from dispute
challenges. This expired on 31 December 2003. Since then, the U.S.
has been bothered by cases such as the cotton dispute. The
Agriculture Commission Chair Crawfold Falconer did not include the
“peace clause” in his text for the mini-ministerial on the grounds
that it is not part of the Doha mandate. However, Lamy seems open to
bringing it back in as “a detail towards the end of the round as in
the case of the Uruguay Round.”
If Lamy’s
proposals are agreed to, dumping of agriculture goods by the U.S.
and EU will continue. And if the “peace clause” is brought back in,
even challenges to the green box will not be possible through the
DSM. The round then will really be only about opening up developing
country markets both in industrial products and agriculture.
3. So far the U.S. is unwilling to reduce domestic supports in agriculture further and lower its demands for market access in agriculture and NAMA from developing countries. U.S. law has, in a sense, created special pressure on setting the deadline for negotiations. Right now, the U.S.T.R. still has “fast track” authority (which comes from the U.S. trade promotion act of 2002) but this will expire in the middle of 2007. Fast track authority means that U.S. Congress can only accept or reject the trade deal that emerges from the negotiations, but it cannot amend it. Without fast track authority, the U.S.T.R.’s office is negotiating with uncertainty because U.S. Congress has the power to amend the agreement even after it is accepted in the WTO, thus rendering the negotiations a waste of time. In order to meet the U.S.T.R.’s fast track deadline, the current negotiations need to be concluded latest by the end of 2006, since after that, the U.S.T.R. has to prepare the legal text to submit to U.S. Congress, etc.
Despite the fact that the U.S.T.R.’s office has fast track authority
at present, U.S. Congress has already indicated to the U.S.T.R.’s
office what it will or won’t accept by way of a trade deal. It is
very likely that spurred by agribusiness lobbies and other
commercial interests, U.S. Congress will reject any agreement that
does not result in major improvements in market access for U.S.
agricultural exports. The G 33 proposal for Special Products (SPs)
and Special Safeguard Measures (SSMs) demand full flexibility in the
use of SP-SSM measures to protect food security, farmers’
livelihoods and rural development. But the U.S. agriculture
proposal imposes limits to the number of products designated as
“sensitive” or “special,” and also on the extent to which developing
countries can use SSMs. With regard to Mode 4 access in the GATS
negotiations, U.S. Congress has made it clear that it will not
accept an agreement that modifies U.S. immigration policy, thus
nullifying the possibility of new Mode 4 visas for developing
countries.
The present U.S. intransigence is tactically useful to the cause of
seriously crippling the Doha Round. However, regardless of the
compromises that the U.S or any other developed country might make,
there is nothing in the Doha Round of negotiations that provides any
hope for either development, or for transforming the WTO into a
fair, multilateral and rules-based global trading system.
4.
Developing countries maintained a
unified stand against the developed countries before and during the
last mini-ministerial meeting. They are increasingly vocal in their
criticisms that the Doha Round is not a “development round” as
promised, but a “market access round.”
This is important. Before and during the Hong Kong Ministerial
Conference, although the LDCs, African countries, G 33 and G-90 were
making this point, the other G 20 countries were more or less silent
on this issue. Now even India, Brazil and South Africa highlight
the importance of “development” in their press statements.
On July 1, all the developing country groupings--The G20, The G33,
The Africa, Caribbean, Pacific (ACP) Group, Least Developed
Countries (LDCs), the Africa Group, the Small Vulnerable Economies (SVEs),
the NAMA-11, the Cotton-4 and
CARICOM —held a joint press conference in which they stressed that
the lack of progress in talks is because some developed countries
are not willing to move further on their commitments. Developing
countries are being asked to make deep cuts in NAMA tariffs while
developed countries are not willing to undertake similar commitments
in NAMA and agriculture. The governments of these countries have so
far stood firm on the following issues:
Developing countries are united in their position that the Doha
round of negotiations must be a development round; the development
dimension is not open for renegotiation and developing countries
will “reclaim” the essence of the development round;
The governments state that flexibilities demanded by the G 33
proposal on Special Products (SPs) and Special Safeguard Measures (SSMs)
are intended to protect specific sectors that are vulnerable, and
are not intended to erode market access as alleged by developed
countries;
Developing countries have different vulnerabilities and the benefits
of markets access also differ across groups of developing countries;
hence flexibilities to protect specific vulnerable sectors and
target groups are very important in order to defend development;
Market access should be enabled for developing countries to the
markets of developed countries and not the other way around;
Developed countries want market access in NAMA, agriculture and
services and also want to retain their levels of domestic supports
and subsidies in agriculture; this is not acceptable to developing
countries;
Farmers’ subsistence and livelihood security in developing countries
cannot be negotiated;
No trade package should disadvantage the small vulnerable economies,
given their vulnerability, and their already extreme openness in
trade and investment;
Unrealistic demands were being placed on developing countries by
developed countries in the NAMA negotiations and these were
motivated by specific commercial interest groups in developed
countries;
The level of tariff reductions in NAMA that are being demanded of
developing countries will result in tremendous social dislocation
and adjustment, without any compensatory measures being discussed;
The concerns of LDCs and small vulnerable economies are being
marginalized by the demands by developed countries in NAMA
negotiations;
WTO trade rules are inequitable in that domestic supports and export
subsidies are legal for agriculture, but illegal for industrial
products;
The proposal by the Cotton 4 must be included in any new deal;
In NAMA negotiations, the Hong Kong Declaration mandates less than
full reciprocity for developing countries and this must be applied
when discussing tariff reductions;
Developing countries have a bigger stake than the developed
countries in the multilateral trading system; they are committed to
completing the round but developed countries must demonstrate their
own commitments first;
Although movement needs to be made on domestic supports in
agriculture, agricultural
market access and NAMA, the three elements are not equal; the most
substantial results must be achieved in areas where the greatest
distortions lie, i.e., in agriculture, that displace developing
country products and threaten the livelihoods of hundreds of
millions of poor farmers;
Market access will be an important component of a successful Round,
but market opening in developing countries must take into account
their social and economic realities;
A development Round should not lead to the deindustrialization of
the developing world;
Special and Differential Treatment (S&D) must be integrated in all
areas of the
negotiations; particularly important are flexibilities in NAMA for
industrial development in developing countries, and SPs and the SSM
in addressing the food security, rural development and livelihood
concerns of developing countries;
The expectations of the LDCs with regard to operationalising the
Hong Kong Ministerial Decision on Duty Free and Quota Free market
access and simplification of rules of origin must be fulfilled;
Issues of preference erosion must be addressed; and,
The negotiating process must be bottom-up, inclusive and
transparent.
At the same time, however, most developing countries reaffirmed their commitment to a successful completion of the Doha Round by the end of 2006. The LDC, SVE and ACP groups consider a bilateral trading system more hostile than a multilateral one and seem committed to making the WTO “work” for them. It is very possible that they will be pushed into accepting a trade deal antagonistic to their interests under pressure to “save the round.”
B.
Agriculture
Agriculture continues to be the most contentious area of negotiations. Deep divisions exist among developed and developing countries on how to address market access (through tariff reductions), domestic supports, export subsidies, Special Products (SPs), Special Safeguard Measures (SSMs), food aid and State Trading Enterprises.
The EU and U.S. refuse to make significant cuts to the subsidies
paid to their own producers and exporters which result in the
dumping of produce on developing countries. Simulations by WTO
members illustrate that the offers by the U.S. and EU to reduce
their domestic support will not actually change current spending
levels. “Box shifting” continues and the U.S. proposal for reducing
its domestic supports allows it to actually expand the amount of
subsidies it currently provides. The U.S. is also unwilling to make
substantial reductions in its cotton subsidies. The EU has stated
that it will not reduce export credits unless there is "parallel
treatment" of all the various components of export competition:
export subsidies, subsidized export credit, food aid, and exporting
state trading enterprises.
The G33 proposal on Special Products and Special Safeguard
Mechanisms - supported by a broad alliance of over 100 WTO member
countries – is being resisted by the major trading powers. Built
upon an established set of criteria for food and livelihood security
and rural development, this is the only proposal at present in the
WTO that attempts to define appropriate mechanisms for developing
countries to protect their agriculture sectors from trade
distortions.
Tariff reduction proposals on the table are complex and while there
is a clear divide between developed and developing countries on
tariff reduction formulas, there are also sharp differences among
developing countries. The ACP Group has argued that they should not
be obliged to undertake significant tariff reductions and that their
rates of cuts should be lower than those proposed by the G-20. The
ACP proposal states that the "overall average reduction of tariffs
by developing countries shall not exceed 24%." Although the ACP
contains the largest number of WTO members, it is not directly
represented in the G-6, which is dominating the current
negotiations. ACP members have also proposed a separate provision
for Small and Vulnerable Economies (SVEs) in relation to the tariff
cuts.
Many developing countries agreed to launch new talks in the WTO with
the hope that imbalances in the Agreement on Agriculture (AoA) would
be redressed. Yet instead of reviewing the AoA to address the
livelihood and survival needs of hundreds of millions of family
farmers worldwide, agriculture talks have focused on expanding
global markets for exporters from developed and to a lesser extent,
developing countries. Uncontrolled imports of agricultural products
into local markets in developing countries are devastating local
livelihoods and driving local producers to ruin. The beneficiaries
of market access are exporting agribusinesses from wealthy countries
and large developing countries while small family farmers, peasants
and agricultural workers in developing countries have been displaced
from their sole source of livelihood.
Urgent agricultural trade problems are not being addressed in the
current negotiations. Dumping of agricultural exports originating in
the U.S. and EU continues, driving down world prices for crops that
the poor depend on, such as cotton, maize, rice, poultry, dairy, and
sugar. And while the market distorting activities of state trading
enterprises are under scrutiny, the much greater power of a small
number of agribusiness firms in a number of commodity markets is
left unchecked.
Possibly the only serious attempt by governments to realize a
development dimension in the Doha Agenda is a recent proposal by the
African Group on how to manage trade in agricultural commodities and
address the crisis in agriculture within multilateral trade rules.
The proposal emphasizes the need to ensure stable, equitable and
remunerative prices for commodity producers and to deal with
structural oversupplies in commodity markets, with measures
including taxes on exports and other export restrictions to promote
development. The African commodity proposal has potential to be
enlarged to cover temperate zone commodities as well.
The African
Commodity Proposal
Since the November 2001 Doha Ministerial Conference, a group of African countries - including Côte d’Ivoire, Kenya, Rwanda, Tanzania, Uganda and Zimbabwe - called for WTO Members to address the rural crisis in developing countries that arises from the decline in prices of commodities. This group of African countries emphasized the negative effects of the “colossal power asymmetry” in commodity markets, which allows a small number of multinational companies to gain an ever-increasing share of the profits from commodities trade, leaving producers in developing countries unable to get a fair price for what they produce. To date, the majority of WTO members have not given serious consideration to these concerns although the declining price of agricultural commodities remains a serious obstacle to reducing poverty levels and to securing benefits from expanding global trade for many developing countries.
In June, a group of 41 African countries offered a proposal on
commodity trade. The proposal focuses on ensuring stable, equitable
and remunerative prices for commodity producers and to deal with
structural oversupplies in commodity markets. The proposal argues
that the following four issues are essential in preventing the ruin
of rural communities:
The elimination of tariff escalation where it discourages
development. Tariff escalation describes a tariff structure in which
tariffs increase as products are transformed from their raw state
into a processed good. For example, tariffs on raw cotton are
typically lower than tariffs on clothing. Tariff escalation allows
developed countries to import raw materials at low cost from
developing countries for their own industries but protects developed
country industry from value-added imports, which discourages
industrial development in developing countries.
The adoption of international systems to manage the supply of
commodities so as to stabilize prices. For commodities such as
coffee or cocoa, world prices are severely distorted by the
structural oversupply of the commodities on international markets.
Oversupply has depressed prices with devastating effects for
small-scale coffee and cocoa producers.
Allowing the use of export taxes and export restrictions to
stabilize commodity prices. Major suppliers of commodities to world
markets, or a number of suppliers acting in concert, can thereby
avoid sharp declines in the world price when supplies increase. This
also allows countries to slow exports if they want to retain
commodities for their own food security. And it offers countries
another option for increasing government revenue.
Negotiating more concrete disciplines to eliminate non-tariff
barriers that affect commodity trade. Non-tariff barriers can
include health and safety standards and packaging requirements that
are essential to any country’s trade regulation. (although those
domestic regulations may be made illegal under the GATS
negotiations) However, other non-tariff barriers can be used as a
way to keep out imports, unfairly discriminating against producers
and exporters from poorer countries. A better system at the
multilateral level is needed to ensure that any standards put in
place are the result of a participatory process, ideally one that
provides funding to commodity producers to raise the quality of
their goods.
The African proposal is particularly important when viewed in light
of the kinds of domestic supports provided by the U.S. and EU and
their effects on world commodity prices. While lowering domestic
supports would affect agricultural commodity prices, it is not the
only measure needed to ensure price stability. Although the US
could cut domestic support payments for a particular crop--such as
cotton—and affect the price of that particular commodity, experience
shows that land used for cotton production would simply be shifted
to corn, soybeans or wheat, driving down the price for those crops
on the world market. In order to stabilize world prices, the U.S.
and EU will need to implement supply management programs for all
commodities in concert with the other major exporters. In the
absence of such measures, lowering domestic supports will get rid of
more family farmers, but will not change the quantity of commodities
produced. Commodity prices will thus remain hostage to the
political maneuverings of law makers in wealthy countries.
C. NAMA
The direction of current negotiations in Non-Agriculture Market Access (NAMA) is being opposed by developing countries, especially the NAMA 11. Accepting the proposals tabled by developed countries on NAMA will lead developing countries in the direction of ‘de-industrialisation.’ Not only will their industrial development be blocked, but also, they will be locked into the production of primary commodities and simple, resource-based, low technology and labour intensive products. At the same time, the imports of industrial goods and raw materials that will likely flood developing country markets once tariffs are reduced may result in the closure of factories and regulated manufacturing units, leading to massive unemployment of industrial workers. Proposals under negotiation will also reduce the flexibilities that developing countries have to use tariffs to protect specific sectors or specific goods against import surges and other unforeseen situations. And unlike as in agriculture trade, there are no provisions for protecting sectors and products under SP-SSM type measures.
The proposals by developed countries for liberalization in NAMA have
three main
characteristics:
Reduction of tariff rates across the board, leading to very low and
eventually to zero tariff rates;
Reduction in tariff dispersion, leading to uniformity of tariff
rates across sectors and products;
Near-universal application of tariff reduction principles and
formulas to almost all countries, with only some special treatment
for LDCs for a temporary period;
In sum, it is proposed that countries cut their tariffs, reduce
their dispersion and bind at least 95 per cent of their individual
tariff lines at about the same low rates.
The tariff reduction formula is based on coupling initial tariffs
applied by countries with fixed (low) coefficients in a non-linear
tariff-reduction "Swiss formula," which is designed to subject
higher tariffs to deeper cuts and lower tariffs to shallow cuts.
This would result in a “harmonization” of tariff rates among
developed and developing countries. The coefficients in the tariff
reduction formula also make a difference. In the Swiss formula
proposed by developed countries, a lower coefficient coupled with a
high initial tariff would result in a deep tariff cut. But a low
coefficient coupled with a low initial tariff will result in shallow
cuts. The latest coefficient numbers being floated by the developed
countries are 10 for developed countries and 15 for developing
countries.
Since many developing countries have high industrial tariffs
compared to developed countries, applying the Swiss formula with low
coefficients means that developing countries overall will have to
reduce their industrial tariffs much more than developed countries.
Further, in that these tariffs will be bound, developing countries
cannot raise tariffs to promote domestic consumption of domestically
produced goods. Many Southeast Asian countries have low industrial
tariffs at present. But these tariffs are not bound, and countries
can raise these tariffs to protect specific sectors and products as
needed, or to promote the development of specific industries or to
upgrade industrial capacity in any given sector. Tariff binding
will take away this policy space. Many LDCs do not have much
industrial capacity at present and are primarily agriculture based
economies. Binding tariffs at low levels will severely limit their
abilities to develop industrial capacity even for small and medium
sized industries, thus locking them into primary commodity
producers.
Such steep reductions in industrial tariffs also mean that
developing countries lose a significant source of revenue. But
developed countries on the other hand, will stand to gain greater
access to the markets of developing countries without any loss of
revenues or worries about threats to their own industrial sectors.
Developed countries are already industrialised and have the capital,
technology, know-how and skilled labour to produce a wide range of
mid to high value industrial goods. Further, their technological
capacities and know-how are already protected by the TRIPs2
Agreement. They also have the capital and well developed capacities
for research and development of new technologies, and upgrading
their industrial sectors will not pose problems for them. Reducing
their industrial tariffs to very low levels will therefore not hurt
developed countries, especially if they gain market access in
developing countries. The situation is reverse for developing
countries as tariffs are practically the only remaining form of
protection they have for their domestic industries.
Developing countries are also opposed to the above proposals since
these proposals do not honour agreement in the Hong Kong Ministerial
Conference Declaration that developing countries will enjoy Special
and Differential Treatment and make tariff reduction on the
principle of “less than full reciprocity.” This means that
developing countries have – at least in theory – the flexibility to
maintain the required level of industrial tariffs (despite making
some tariff cuts) to protect their future industrial capacity. LDCs
in particular would require exemption from tariff reductions, as
well as technical support and technology transfer to develop their
industrial capacities.
Reducing industrial tariffs and giving up the right to increase
tariffs means that small, medium and even heavy industries in
developing countries will have to face stiff competition from
imported manufactured and industrial goods, many of which would be
more cheaply priced than local goods. This in turn would reduce
demand for locally/ nationally made goods, and eventually result in
job losses and unemployment, much in the same way as cheap
agricultural imports have led to the displacement of peasant
producers from local agriculture.
Recent studies (as the one conducted by the Carnegie Foundation)
find that by reducing industrial tariffs, the poorest developing
countries and regions—Bangladesh, East and Sub-Saharan
Africa—actually lose unskilled jobs in manufacturing industries, as
well as market share in some or all manufactured products. Losses
in tariff revenues because of drastic revenue cuts are estimated to
be worth about U.S. $63.4 billion in the industrial sector alone.
This loss is ten times greater than the projected gains for
developing countries as a whole from the Doha Round (U.S. $6.7
billion).
Deindustrialization combined with the proposed ´sectoral
negotiations´ for sharp or complete tariff liberalization of natural
resources under NAMA (which is planned to include fisheries,
forestry and mineral resources) is also likely to push countries
into increasing dependence on exports of primary commodities,
natural resources and mineral wealth. Not only do such exports
generate relatively small and temporary returns, but also, they
destroy the livelihood base for millions of people who depend on
these resources and associated lands. For example, at least 350
million people live in or next to dense forests and rely on them for
subsistence or income, and 60 million indigenous people are directly
dependent upon forest resources for food, fuel, medicines and raw
materials. Some 30 million people are directly employed in
small-scale artisanal fishing. All these livelihoods are jeopardized
by efforts to appropriate natural resources for export.
D. Services
Since the Ministerial Conference in Hong Kong, concessions in the liberalization of services under the GATS have become a trade-off for concessions in agriculture and NAMA negotiations. Many developed countries, including the U.S. and the EC, have made it clear that they are not prepared to make reductions in their domestic supports, export subsidies and tariffs in agriculture unless developing countries make substantial market access commitments in GATS and NAMA.
Unfortunately, many developing countries seem willing to go along
with this “trade-off” approach. Although most developing countries
do not have well-developed service sectors, services are vital to
their national economies. Most services are essential for
agricultural and industrial production (for example, water,
electricity, energy, transportation, retail, finance, etc.).
Trading them off for doubtful gains in other negotiations will
undermine these sectors as well as cripple the abilities of
developing countries to use their service sectors to generate
employment and shore up domestic capital and assets.
GATS negotiations are aimed towards securing greater market access
for foreign service providers and are anti-development. Although
some developing countries—including LDCs—have expressed interest in
specific modes of service provision such as Mode 1 (cross border
provision of services) and Mode 4 (the movement of natural persons
across international borders), the most aggressive push for services
liberalization is coming from developed countries, who seek to
secure market access for their respective firms/ corporations in the
service sectors of developing countries. Of particular interest to
them are public interest sectors such as health, education,
telecommunications, water, retail, transportation, logistical,
environmental and financial services, energy, etc., which have the
largest markets in developing countries.
Developed countries want their companies to be given “national
treatment” in developing countries and be allowed to establish
commercial presence with the same privileges and facilities as
domestic firms, including the eligibility to bid for
government/public procurement contracts.
Since the Hong Kong Ministerial Conference, GATS negotiations have
entered a new and intensive negotiating phase. The key elements in
the current negotiations are:
Establishing various “benchmarks,” including sectoral and modal
objectives, designed to increase and deepen GATS coverage;
Mandating a new negotiating model: “plurilateral request-offer,”
that gives a more prominent role to the so-called “Friends groups,”
who are the most aggressive GATS
demandeurs;
Providing a major impetus to domestic regulations negotiations,
which are now mandatory and have been de-linked from the other
rule-making negotiations;
While before GATS negotiations were bilateral, now they are also
proceeding on a plurilateral basis. Plurilateral negotiations take
place among groups of countries, rather than between two parties as
in bilateral negotiations. By the end of February 2006, some 20
plurilateral requests had been tabled, largely by so-called “Friends
groups”3 towards mostly developing countries with larger
economies (also called emerging countries). The next round of
revised offers are due on July 31, 2006. Final draft schedules of
commitments must be submitted by October 31, 2006, so that the
final, legally binding GATS schedules can be ready by year-end.
Some of the most worrying negotiations in the GATS are on new rules
regarding domestic regulation. The proposed new rules would
restrict domestic laws and regulations at all levels of government
even when they do not discriminate against or between foreign
investors. Such restrictions would seriously curtail governments’
rights to regulate their service sectors and weaken governments’
abilities to protect the public interest. GATS Article VI:4
specifies that WTO Members shall develop “necessary disciplines” to
ensure that “measures relating to qualification requirements and
procedures, technical standards and licensing procedures do not
constitute unnecessary barriers to trade in services.” Annexe C (the
section on services) of the Hong Kong Ministerial Declaration
mandates that negotiations on these disciplines be concluded and
legal text developed by the end of 2006.
Although GATS recognizes the rights of government to regulate, these
rights can be exercised only in accordance with GATS obligations.
Means and forms of domestic regulatory action will be open to
challenge in the WTO’s Dispute Settlement Mechanism (DSM) if they do
not conform to GATS disciplines.
Current negotiations seek to make domestic regulations
non-discriminatory,
i.e., to say that the same rules apply to local/national and foreign
service providers in order to ensure full market access for foreign
providers. Of particular concern are proposals to apply some form
of “necessity test” to domestic regulations and licensing
requirements, which would assess whether these measures are indeed
necessary to achieve domestic policy objectives Such tests are
difficult for governments to meet since policy objectives often
require a range of policy measures implemented in concert with one
another. Proving ‘causality’ between a single regulatory measure
and a single policy objective is not only difficult, but also, it
ignores the systemic inter-relationships between domestic laws,
regulations and development policies.
Brazil and Philippines recently tabled a proposal that rejects the
necessity test as “neither necessary nor convenient.” This stance
is supported by the Africa Group, the ACP, SVEs and Argentina, among
others. Developed countries led by Switzerland, Australia and New
Zealand have attacked the Brazil-Philippines position saying that it
“lacks ambition.” But some developing countries including India,
Chile and Mexico support the inclusion of a necessity test. India’s
main concern is that its professionals should not be prevented from
working abroad because licensing requirements. Chile, Taiwan, and
Hong Kong, China recently tabled text that includes the full
application of a necessity test and stipulates that regulatory
measures should be “not more burdensome than necessary to meet
specific national policy objectives to ensure the quality of the
service.” A joint China-Pakistan proposal states that “Members
shall ensure that licensing requirements do not act as barriers to
trade in services and are not more trade restrictive than required
to fulfill national policy objectives.” The U.S. has even made a
proposal on transparency requirements that would require governments
to give foreign governments and service providers prior notice of
and an opportunity to comment on new regulations.
In most countries, almost all regulations act as trade barriers of some sort because they deliberately seek to curb commercial activities in order to promote other public interest related objectives. This is especially so in the case of the GATS, which defines trade to include investment. Proposals to inhibit licensing and other regulatory measures are dangerous and signal a move towards regulatory regimes that prioritise trade and investment over broad based public interest.
Overseeing domestic regulations is not an appropriate role for the
WTO. Domestic regulations are drafted according to the political
realities, contexts and needs of each country and should not be
overridden by commercial, trade and investment interests. If
allowed to be brought into the WTO regime, domestic regulations will
become vulnerable to challenge in the WTO’s DSM. This in and of
itself will undermine the willingness of law-makers to draft new
public interest regulations, especially in developing countries
where regulatory structures are generally weaker than in wealthy
countries. It is critical that the public, civil society
organisations, regulators, and elected representatives at national
and local levels oppose necessity tests and any proposal that
interferes with the rights and abilities of local and national
governments to regulate.
GATS proponents have successfully forced the pace of negotiations
and are pushing for ambitious results within a very short
time-frame. At the same time, there has been almost no discussion
about the negative impacts of GATS commitments on public services,
public interest regulation and regulation of foreign investment.
The mandated assessment of the implications of existing GATS
commitments has never occurred, despite long-standing developing
country demands for a thorough evaluation before the treaty is
expanded.
Negotiations on domestic regulations need to be halted immediately.
In fact, there should be no further negotiations on services
liberalization at all until countries have carried out comprehensive
assessments of the impacts of past services liberalization and
privatization.
E. Conclusions
Although the Doha Round was launched in 2001 as a “Development Round,” the nature of negotiations since then has demonstrated that development is the farthest issue on the minds of WTO members. Pascal Lamy and the trade majors have transformed the language of current negotiations to stress market access instead of development.
At the very outset of the Doha negotiations in November 2001,
developed country governments rejected the demand of developing
countries that the talks focus on implementing past commitments and
avoid initiating a new round of trade liberalization. But from the
very start, the aim of developed countries was to extract greater
market openings from developing countries while making minimal
concessions on their part. Calling this a “development round” was a
cynical ploy to make sure that developing countries did not leave
the negotiating table.
Developed countries and some developing countries are single
mindedly seeking to expand market access for their businesses and
corporations at the cost of majority of the world’s peoples,
especially those who are already impoverished. The way the
negotiations are proceeding it is likely that most developing
countries will be pressured and brow-beaten to accept trade deals
that they are either opposed to, or which they may not have time to
fully assess.
The current global model of agricultural trade has already left
millions impoverished, undermined food security and sovereignty,
entrenched hunger and starvation world-wide, and destroyed the
livelihoods of subsistence farmers. If negotiations in agriculture,
NAMA and services conclude in accordance with the ambitions of
developed countries, the above conditions will be heightened to
unprecedented levels, along with additional crises of
deindustrialization, unemployment and environmental destruction.
Instead of promoting development, reducing poverty and increasing
spending on health care, education, water and other essential
services, governments will give corporations a free reign over their
economies. Particularly vulnerable are family farmers and fishers,
peasant producers, agricultural and industrial workers, indigenous
communities and rural and urban poor communities.
To placate the most vulnerable developing countries, developed
countries proposed an “Aid for Trade” scheme to address the
“adjustment costs” of trade liberalization such as increases in
unemployment, and the destruction of some industrial and
agricultural sectors. However, it is clear that any “aid” from rich
countries will be conditioned on the willingness of developing
countries to trade away their policy space and agree to deep
liberalization commitments. Once lost, no amount of money can buy
back policy space.
The Doha package is a bad deal. It serves the private interests of
the biggest corporations around the world, most of them
headquartered in the developed world. It fails to respond to a
series of publicly identified public policy priorities for trade:
ensuring food sovereignty and security, full employment under decent
conditions, sustainable management of our natural resource base, the
generation of domestic capital to build virtuous economic circles in
poor countries, the need to curb dumping of under-priced
agricultural commodities in world markets, and the need to address
the market distortions created by monopoly and oligopoly power
exercised by a small number of corporations in many sectors of the
global economy.
A complete collapse of the Doha Round negotiations will not be a failure; on the contrary it will be a victory for development and the majority of the world’s peoples. Trade negotiators from developing countries must hold firm and fight for development and the well being of their populations. The only ethical position for them is to hold firm and walk away from these negotiations.
This text was prepared by members of the Food Sovereignty Network. Please visit the Network’s website for more documents (http://www.peoplesfoodsovereignty.org/). For more information about this document, please contact Shalmali Guttal from Focus on the Global South (s.guttal@focusweb.org ).
References
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1 Comprising of: Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia, and Venezuela.
2 TRIPs stands for Trade Related Aspects of Intellectual Property Rights.
3 “Friends groups” are WTO members who have an interest in liberalizing services within their own countries as well as in the countries targeted with a request. Countries asking for liberalization are called demandeurs and include the OECD countries, Mexico and Chile. Countries on the receiving end of plurilateral requests include Brazil, Argentina, Colombia, Venezuela, South Africa, Nigeria, Kenya, Egypt and Morocco, Thailand, Indonesia, Malaysia, Philippines and China. India is a demandeur in some areas but a receiver in others.